Austria's conservative People's Party (ÖVP) has emerged as the strongest political power after Sunday's general election.

With 42.3 percent of the vote, it will lead the country for the first time since 1966.

The landslide victory of the conservatives came as a surprise: pollsters had predicted that both the ÖVP and the Social Democratic Party (SPÖ) would bring in roughly the same amount of votes.

More surprising still, Jörg Haider, the Freedom Party's charismatic and controversial leader has announced his resignation as the governor of Carinthia as a consequence of his party's poor showing in the election. The far-right FPÖ earned only 10.2 percent of the vote, losing two-thirds of its voters after bringing in 26.9 percent in 1999.

The chaos and disarray in the FPÖ had forced Chancellor Schlüssel to call elections a year before the end of the legislative period in the first place. It also brought his party its election victory; Analysts believe that increased support for the ÖVP came from voters disenchanted with the FPÖ.

In September, fissures in the FPÖ turned into ruptures at the party convention in Knitterfeld when the party broke into two wings: a more liberal wing supportive of then-party leader Susanne Riess-Passer and the followers of the extreme anti-immigrant and anti-EU party founder, Jörg Haider. Four Freedom Party ministers, including Riess-Passer, resigned from the government.

Little choice for a junior partner

SPÖ party head Alfred Gusenbauer conceded defeat Sunday evening. The party did bring in 36.9 percent of voted (up 3.8 points from last election), but thanks to the poor showing of the Green Party (9.0 percent), the Social Democrats won't be able to command a red-green government.

Gusenbauer confirmed that his party would not betray its campaign promises by entering into a coalition with the ÖVP. "Our place is in the opposition," he confirmed. Before the election Gusenbauer had announced that if the SPÖ came in second it would remain in the opposition.

Chancellor Wolfgang Schüssel has said that he will hold coalition talks with all three of the other leading parties.

"We want to hold frank talks with all three parties. Nothing has been prearranged," the Chancellor told Austrian television.

But despite those assurances, another ÖVP-FPÖ coalition seems likely. On top of the Social Democrats' rejection, Green Party leader Alexander Van der Bellen has said no to forming a coalition with the conservatives.

Freedom Party head Herbert Haupt, meanwhile, took responsibility for the FPÖ's poor showing, while emphasizing that he hopes to remain in his position. He also spoke out in favor of another ÖVP-FPÖ coalition. Before the election the de facto party leader Jörg Haider had rejected the idea of his party entering into another government with the People's Party.

European reactions

The European press has largely welcomed the Freedom Party's fall.

The German daily Süddeutsche Zeitung comments that: "The FPÖ is one of the first unrestrictedly populist parties in Europe that has been in the awkward position of having to realize its promises. The result is its total lack of credibility." According to Italy's La Repubblica, the election shows that "the wave of euro-populist xenophobia is on its way out of Europe."

The Dutch daily Volkskrant looks at the balance for Chancellor Schüssel: "Political observers believe that he consciously pursued a strategy to bring the Freedom Patty down a notch by giving it governmental responsibilities. The election shows that he succeeded. Now Schüssel can hold his head high when he meets his colleagues in Europe or show them the finger."

At the same time, the Spanish daily El Pais writes that Schüssel faces two unappetizing choices: Another coalition with the Freedom Party, could end up with the FPÖ breaking up, leaving Schüssel to face a stronger opposition without a majority. A coalition with the Social Democrats, however, could cause the same situation that brought the far-right into the government in the first place.

More of the conservative status quo

Schüssel's new government is likely to continue its aims to limit deficit spending, pursue liberalization and privatize state stakes in Austrian companies. The ÖVP is also a strong supporter of EU enlargement.